India’s excessive dependency on oil imports (>85%) coupled with the recent rise in international oil prices above $ 100/barrel will have widespread macro-economic implications for an economy still recovering from the pandemic. While higher prices will further accelerate the energy transition away from conventional fuels in the short term, it also reduces access and use of modern forms of energy thereby reducing productivity and quality of life.

One critical dimension of energy pricing which assumes even greater importance as the energy transition gathers momentum is ‘energy taxation’ and its impact on public finance. This policy brief continues our exploration of this topic and builds on the earlier working paper and panel discussion. While this policy brief focuses on the energy sector given its critical role in public finance, it is clear that the country would need to prepare for a gradual transformation of the taxation regime, going beyond just the energy sector or even just indirect taxes. This can ensure a much smoother and effective energy transition while maintaining public revenues.

For this policy brief, we have expanded our dataset to cover a period of four years, from FY2018 to FY 2021, in order to better observe and identify trends. This entire cleaned up data is being made publicly available for other researchers to easily access and contribute to this area of work, even as we continue to explore it further. The data sources, methodology and any assumptions are detailed in the dataset itself.